Government: The Limits of Policy

... ethnicity correlates to huge differences in how people live. Nationally, 50 percent of Asian-American adults have a college degree, compared with 31 percent of whites, 17 percent of African-Americans and 13 percent of Hispanics.

Asian-Americans have a life expectancy of 87 years compared with 79 years for whites and 73 years for African-Americans.

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The region you live in ... makes a gigantic difference in how you will live. There are certain high-trust regions where highly educated people congregate, producing positive feedback loops of good culture and good human capital programs. This mostly happens in the northeastern states like New Jersey and Connecticut. There are other regions with low social trust, low education levels and negative feedback loops. This mostly happens in southern states like Arkansas and West Virginia.

If you combine the influence of ethnicity and region, you get astounding lifestyle gaps. The average Asian-American in New Jersey lives an amazing 26 years longer and is 11 times more likely to have a graduate degree than the average American Indian in South Dakota.

When you try to account for life outcome differences this gigantic, you find yourself beyond narrow economic incentives and in the murky world of social capital. What matters are historical experiences, cultural attitudes, child-rearing practices, family formation patterns, expectations about the future, work ethics and the quality of social bonds.

It is very hard for policy makers to use money to directly alter these viewpoints. In her book, “What Money Can’t Buy,” Susan E. Mayer of the University of Chicago calculated what would happen if you could double the income of the poorest Americans. The results would be disappointingly small. Doubling parental income would barely reduce dropout rates of the children. It would have a small effect on reducing teen pregnancy. It would barely improve child outcomes overall.

So when we’re arguing about politics, we should be aware of how policy fits into the larger scheme of cultural and social influences. Bad policy can decimate the social fabric, but good policy can only modestly improve it.

See The Limits of Policy by By David Brooks, May 3, 2010.